Price each node forward (S₀·uᵏ·dⁿ⁻ᵏ), then fold the payoffs back at the risk-neutral probability p. The asset price sits in each circle; the option value is beneath it in the accent colour.

Assumption: r is a continuously compounded per-step rate with one step per period (Δt = 1), so the per-step growth is e^r and the discount factor is e^−r. p = (e^r − d) / (u − d); each node = e^−r·[p·V_up + (1−p)·V_down].